Executive Summary

GAAP EPS of $4.97 and non-GAAP EPS (ex-derivative MTM) of $5.05 materially exceeded consensus $1.91, driven by a $175.0M pre-tax gain from the partial redemption of the ALLO investment and resilient core operations .
Revenue* of $0.516B beat the $0.379B consensus, with Loan Servicing and Systems (LSS) revenue up 10.7% y/y to $120.7M on private loan servicing conversions (Discover, SoFi) and cost efficiencies .
Solar EPC remains a drag: Q2 net loss of $13.4M and $12.9M of contract loss reserves on remaining legacy projects; management continues to wind down loss-making legacy contracts .
Capital return: repurchased 183,554 shares ($21.4M) and raised the quarterly dividend to $0.30; ALLO redemption proceeds ($410.9M) bolster liquidity and optionality .

What Went Well and What Went Wrong

What Went Well
- Strong consolidated performance aided by ALLO transaction: “We delivered a strong quarter…investing in our key areas: loan servicing, consumer lending, payments, and technology” — Jeff Noordhoek, CEO .
- LSS operating leverage: revenue $120.7M (+10.7% y/y), segment net income $15.2M (vs. $1.7M y/y), benefiting from private loan servicing volume and technology/automation efficiencies .
- AGM core loan spread improved; loan and investment NII reached $49.9M (+39% y/y), offsetting FFELP amortization effects .
What Went Wrong
- Solar EPC headwinds: Q2 net loss of $13.4M and $12.9M of contract loss reserves as legacy projects continue to pressure margins .
- Beneficial interest investments: $5.0M additional allowance due to higher defaults/prepayments in certain securitizations, reducing expected cash flows .
- Nelnet Bank posted a small net loss (-$0.4M) on higher provision and derivative valuation losses despite improving NIM and portfolio growth .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)*	$318.7	$380.1	$516.1
Primary EPS (Non-GAAP, $)*	$1.20	$2.39	$5.05
GAAP Net Income ($USD Millions)	$45.1	$82.6	$181.5
GAAP EPS ($)	$1.23	$2.26	$4.97
Net Interest Income after Provision ($USD Millions)	$62.8	$67.4	$61.5
Total Other Income ($USD Millions)	$266.3	$315.8	$461.2

Values with * retrieved from S&P Global.

Estimates vs Actuals (S&P Global):

Metric	Q2 2024 Estimate*	Q2 2024 Actual*	Q1 2025 Estimate*	Q1 2025 Actual*	Q2 2025 Estimate*	Q2 2025 Actual*
Primary EPS (Non-GAAP, $)	$1.33	$1.20	$1.92	$2.39	$1.91	$5.05
Revenue ($USD Millions)	$359.0	$318.7	$393.0	$380.1	$379.0	$516.1
EPS - # of Estimates	1	—	1	—	1	—
Revenue - # of Estimates	1	—	1	—	1	—

Values retrieved from S&P Global.

Segment Performance

Segment	Q2 2024	Q1 2025	Q2 2025
LSS Revenue ($USD Millions)	$109.1	$120.7	$120.7
ETSP/NBS Revenue ($USD Millions)	$116.9	$147.3	$118.2
LSS Net Income After Tax ($USD Millions)	$1.7	$14.1	$15.2
ETSP Net Income After Tax ($USD Millions)	$19.5	$36.1	$17.9
AGM Net Income After Tax ($USD Millions)	$18.5	$22.7	$20.8
Nelnet Bank Net Income After Tax ($USD Millions)	-$2.8	$1.5	-$0.4

KPIs (Servicing volumes and borrowers)

KPI	Q2 2024	Q1 2025	Q2 2025
Total Servicing Volume ($USD Billions)	$523.8	$542.3	$516.1
Government ($USD Billions)	$489.3	$482.8	$465.7
FFELP ($USD Billions)	$14.6	$12.8	$12.4
Private & Consumer ($USD Billions)	$19.9	$46.7	$38.0
Total Borrowers (Millions)	15.536	15.623	14.523

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per share	Q3 2025	$0.28 (Q2 declaration)	$0.30	Raised
Share repurchase authorization	3-year through May 8, 2028	New authorization for up to 5M shares	Ongoing	Maintained
Formal revenue/EPS guidance	FY/Qtr	None disclosed	None disclosed	Maintained

Earnings Call Themes & Trends

Note: No Q2 2025 earnings call transcript was available; themes reflect press release and supplemental financials.

Topic	Q2 2024 (Q-2)	Q1 2025 (Q-1)	Q2 2025 (Current)	Trend
Loan servicing contract (USDS)	Lower per-borrower revenue under USDS; restructuring costs	Government servicing revenue down y/y; private servicing rising	LSS revenue up; margin improvement via cost management and automation	Improving mix and efficiency
Private loan servicing conversions	Pipeline (Discover, SoFi) conversions expected	Discover/SoFi conversions completed late Q4’24/Q1’25	Benefit realized in LSS revenue and borrowers	Conversions accretive
Solar EPC	Ongoing losses; legacy projects weigh	Residential exit; impairments	Q2 net loss $13.4M; $12.9M contract loss reserves	Headwinds but winding down
Beneficial interests in securitizations	Large provision/impairment in Q3’24	—	Additional $5.0M allowance due to defaults/prepayments	Continued caution
FFELP portfolio runoff/prepayments	Elevated consolidation runoff earlier; easing since Aug’24	Significant decrease in consolidations since Aug’24	Prepayments consistent with long-term rates	Stabilizing
ALLO investment	No further losses; preferred returns	Planned redemption, ~$175M pre-tax gain	Closed redemption; $175M gain, ownership to 27%	Liquidity and gain realized
Nelnet Bank	Higher provisions; NIM dynamics	NII up; provision lower; derivatives loss	Slight net loss; portfolio growth, NIM improved	Building scale

Management Commentary

“We delivered a strong quarter, driven by continued performance across our core businesses…investing in our key areas: loan servicing, consumer lending, payments, and technology…” — Jeff Noordhoek, CEO .
On ALLO: $410.9M cash proceeds; $175.0M pre-tax gain; ownership reduced to 27%; remaining interest accounted under HLBV with carrying value $0 .
LSS: Revenue $120.7M with improved margins from technology and automation; servicing $516.1B for 14.5M borrowers .
NBS: Revenue $118.2M; continued investments impacting operating margin .

Q&A Highlights

No Q2 2025 earnings call transcript was available; no Q&A disclosed in the public documents reviewed. Analysis is based on press release and supplemental materials .

Estimates Context

EPS: Non-GAAP EPS of $5.05 was a material beat vs $1.91 consensus due to the ALLO gain and better segment performance; consensus coverage was thin (1 estimate), suggesting limited sell-side attention and potential for estimate dispersion going forward (values retrieved from S&P Global).
Revenue: $516.1M* beat $379.0M* consensus by ~$137M, reflecting consolidation of the ALLO gain within reported other income and increased LSS/ETSP contributions (values retrieved from S&P Global).
Implication: Sell-side models likely underweighted one-time ALLO gains and improving LSS efficiency; expect upward revisions to FY EPS but caution on sustainability of one-offs (values retrieved from S&P Global).

Key Takeaways for Investors

Core operations healthy; LSS and AGM executed well, while NBS growth remains investment-heavy — positive for medium-term margin normalization .
The $175M ALLO gain and $410.9M proceeds strengthen liquidity and capital allocation flexibility (buybacks, selective acquisitions) .
Solar EPC losses persist but are tied to legacy contracts being wound down; expect ongoing noise but diminishing scope into 2H/2025 .
FFELP runoff pressures are moderating as consolidation activity eased since Aug’24, stabilizing spread dynamics for AGM .
Nelnet Bank scale-up continues; watch credit provisioning and derivative P&L while NIM trends remain constructive .
Near-term trading: Expect positive reaction to headline EPS beat and dividend increase; note one-time nature of ALLO gain.
Medium-term thesis: Diversified fee + NII model with improving servicing efficiency and optionality from ALLO proceeds; monitor execution on solar wind-down and private loan servicing growth .

NELNET INC (NNI)·Q2 2025 Earnings Summary